Bitcoin (BTC-USD) was trading within a narrow 24-hour price range of $57,200 to $58,200 on Thursday.
Chart indicators suggest that the cryptocurrency is in a precarious position, which could either lead to further declines or stabilisation, followed by gradual appreciation.
Bitcoin rebounded from a low of around $54,600 at the start of the week, to trade at around $58,120.
Bitcoin’s price has steadily declined from $71,000 since the beginning of June.
Multiple sell-pressure factors over the past weeks has caused a spike in price volatility. Some traders fear a potential increase in the digital asset’s supply hitting the market, originating from seized bitcoins held by the German and US governments, according to this week’s CryptoQuant market report. Further sell-side pressure could come from the distribution of funds from the defunct bitcoin exchange Mt Gox.
Read more: Crypto live prices
On-chain analysis from CryptoQuant suggests that a major price correction or the onset of a sustained bear market could be imminent, as charts show the profit and loss index is hovering around its 365-day moving average.
Charts from the blockchain analytics firm indicate that previous crossovers below the 365-day moving average preceded significant declines for bitcoin in both May and November 2021, when the digital asset fell by approximately 40% on each occasion.
According to CryptoQuant analysts, bitcoin long-term holders — addresses that have held the digital asset for 155 days or more — are accumulating at the fastest monthly rate since April 2023.
“Bitcoin whales have been increasing their holdings at a monthly growth rate of 6.3%, the fastest pace since April 2023, indicating rising demand for bitcoin,” CryptoQuant said in a market report on Wednesday.
Read more: Why the price of bitcoin is falling
The uptick in demand from the long-term holder cohort is acting as a support for bitcoin’s price, according to the report.
The analysts noted that long-term holders realised substantial profits when prices exceeded $71,000 at the beginning of June. However, they have since incurred some losses and are now more reluctant to sell.
“This could be an early sign of a bitcoin price bottom,” CryptoQuant said.
Bitcoin’s prices could also take longer to commence a new upward trend, as stablecoin liquidity growth is still not in full swing, according to the report.
The market capitalisation of USDT (USDT-USD), the world’s largest stablecoin by trading volume, has been decreasing. This could delay or dampen the potential for any significant bitcoin price appreciation, according to the CryptoQuant report.